Analysis of the Operation and Financial Condition of the Enterprise

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Analysis of the Operation and Financial Condition of the Enterprisethose current asset items influencing the changes in the current assets, the analysis ofchanges in the current asset items by period has been carried out in absolute figures (seeTable 5.15) and in percent (see Table 5.16).Table 5.15. Changes in the items of current assets of the Enterprise N inthe period from 31/03/2XX8 to 31/12/2XX9 (in CU)March,2XX8June2XX8Sept.,2XX8Dec.,2XX8March, 2XX9June,2XX9Sept.,2XX9Dec.,2XX9Changes in theamount of stock 144 1144 -838 383 -370 2391 1359 -3411Changes in workin progress 24951 11888 56050 -52643 86548 -25413 -67051 28805Changes inaccountsreceivable -493 13096 52702 47561 78706 -67327 -24857 -25166Changes inadvances forpurchases 2952 -954 3208 -6901 2618 -2225 885 -296Changes in shorttermloans 30000 2000 -6500 -7500 -6500 0 0 1500Changes inprepaid expenses 108 63 296 251 264 273 670 -820Changes in cashitems -14911 3984 -2917 -6629 -2813 2009 -1319 7654Changes incurrent assets 42751 31221 102001 -25478 158453 -90292 -90313 8266Table 5.16. Changes in the items of current assets of Enterprise N in percent in theperiod from 31/03/2XX8 to 31/12/2XX9 (in CU)March,2XX8June2XX8Sept.,2XX8Dec.,2XX8March,2XX9June,2XX9Sept.,2XX9Dec.,2XX9Changes in theamount of stock, % 41,5 76,7 -128,3 37,0 -55,6 78,2 30,8 -339,4Changes in work inprogress, % 35,5 14,5 40,6 -61,5 50,3 -17,3 -84,2 26,6Changes in accountsreceivable, % -0,6 12,9 34,2 23,6 28,1 -31,6 -13,2 -15,4Changes inadvances forpurchases, % 27,8 -9,9 24,9 -115,3 30,4 -34,9 12,2 -4,2Changes in shorttermloans, % 100,0 6,3 -25,5 -41,7 -56,5 0,0 0,0 11,5Changes in prepaidexpenses, % 5,8 3,3 13,3 10,1 9,6 9,1 18,2 -28,6Changes in cashitems, % -166,7 30,8 -29,1 -195,8 -491,8 77,8 -104,5 85,8Changes incurrent assets, % 20,3 12,9 29,7 -8,0 33,2 -23,4 -30,5 2,7106
Analysis of the Operation and Financial Condition of the EnterpriseThe amount of current assets has been reduced in Quarter 2 and 3 of 2XX9. Thiscan be explained by the lowest profitability figures of the enterprise during the sameperiod.In order to see the percentage of changes in the current asset items from the totalamount of change in the current assets, Table 5.17 has been designed.Table 5.17.Percentage of changes in the current asset items in the total amount of changein current assets in Enterprise NMarch,2XX8June,2XX8Sept.,2XX8Dec.,2XX8March,2XX9June,2XX9Sept.,2XX9Dec.,2XX9Changes in stock, % 0,3 3,7 -0,8 1,5 -0,2 2,6 1,5 -41,3Changes in work inprogress, % 58,4 38,1 55,0 -206,6 54,6 -28,1 -74,2 348,5Changes in accountsreceivable, % -1,2 41,9 51,7 186,7 49,7 -74,6 -27,5 -304,5Changes in advancesfor purchases, % 6,9 -3,1 3,1 -27,1 1,7 -2,5 1,0 -3,6Changes in short-termloans, % 70,2 6,4 -6,4 -29,4 -4,1 -0,0 -0,0 18,1Changes in prepaidexpenses, % 0,3 0,2 0,3 1,0 0,2 0,3 0,7 -9,9Changes in cash items,% -34,9 12,8 -2,9 -26,0 -1,8 2,2 -1,5 92,6Changes in currentassets, % 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0By viewing the Tables 5.16 and 5.17 it can be seen that ‘Work in progress’ and‘Accounts receivable’ are the most significant items of current assets, as the values of theseitems are the highest in the current assets as well as changes in these items areconsiderable.The enterprise has issued a short-tem loan to the owners which constitute 13 thous.CU as at 31/12/2XX9. This may not be considered a correct decision of the management asthere have been serious liquidity concerns in the enterprise at that time. The managementof the enterprise are also its owners. The overall assessment of the decreasing value of thisbalance sheet item from the second half of 2XX8 is positive, because if the working capitalis held by the owners of the enterprise, they are suspended instead of being invested for theimprovement of the enterprise operations.The amount of the current asset item of ‘Cash’ does not play a significant role atthe date of financial report taking into account that the enterprise has a large debt to itssuppliers.Under the current asset item ‘Advances for purchases’ usually includeprepayments for the ventilation, conditioning or heating equipment that need to be orderedin advance. These systems are highly specific in nature and are therefore being orderedstraight from the factory, i.e., directly from the manufacturer. The lead time betweenordering and delivery of this equipment is at least four weeks, therefore it can be stated thatthe cash assets are being suspended in the form of an advance payment for the equipment107
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Analysis of the Operation and Financial Condition of the Enterprise

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